China's antimonopoly enforcement agency confirmed on Wednesday that it is investigating Microsoft "on suspicions of monopolistic behavior." Previous reports noted that China's State Administration for Industry and Commerce visited several Microsoft offices on Monday and interviewed employees, but we now know that the agency also seized PCs, hard drives and documentation.
"An investigation has been established into Microsoft Corporation on suspicions of monopolistic behavior," a State Administration for Industry and Commerce announcement notes, confirming speculation that Monday's action was related to antitrust. In Microsoft Faces Mysterious Inquiry by Chinese Government, I noted that there were many questions around the Chinese government's actions, but that the suspicion is that they were possibly related to antitrust.
Given the rampant software piracy in China, and recent trends in which mobile computing devices and cloud services are replacing PCs, the very notion of China accusing Microsoft of antitrust violations may seem far-fetched. But the country enacted an antimonopoly law in 2008 that is part of a wider effort to disadvantage foreign corporations and prop up state- and China-based businesses and technologies. In other words, simple xenophobia.
"Only if core technologies are in our own hands can we truly hold the initiative in competition and development," China president Xi Jinping said in a speech this year in which he called on the country to reduce its reliance on non-Chinese technology.
Microsoft has found itself on the receiving end of a number of bizarre legal actions in recent years, including a ban on Windows 8 use in governmental computers. Part of the reason is that China believes tech companies are helping the US government spy on China through backdoors to their products and more overt means.
The trigger for this week's action is still unclear. But the State Administration for Industry and Commerce claims that Chinese businesses have complained that the ways in which Microsoft Windows and Office are packaged and sold violates the country's antimonopoly law.
"Microsoft complies with the laws and regulations of every market in which we operate around the world and we have industry leading monitoring and enforcement mechanisms in place to ensure this," a Microsoft statement counters. "Our business practices in China are designed to be compliant with Chinese law."
We do know a few more details about the action, however. Nearly 100 State Administration for Industry and Commerce officers visited four Microsoft offices in China on Monday and interviewed senior managers and employees. They took copies of financial documentation and computer data with them, and confiscated a handful of PCs and hard drives. The agency also says it also wishes to interview (unnamed) Microsoft executives who are currently outside of China.
If it helps, Microsoft isn't alone. The State Administration for Industry and Commerce investigated Qualcomm last year. And earlier this month a state-run television station accused Apple's iPhone of being a "national security threat" that could expose state secrets.
